UK becoming ‘self employment capital of Western Europe’

The UK is becoming the ‘self-employment capital’ of Western Europe, according to new analysis from the think tank IPPR.

IPPR’s analysis shows that growth in self-employment in the UK has been the fastest of all Western European countries over the last year, with the proportion of workers who are self-employed rising by almost a whole percentage point.

IPPR says that the UK had internationally low levels of self-employment for many years, but has caught up with the EU average and, if current growth continues, the UK will look more like Southern and Eastern European countries which tend to have much larger shares of self-employed workers.

IPPR says self-employment has proven to be a key driver of overall job creation, with the working-age employment rate reaching historically high levels.

IPPR’s analysis shows that between the first quarters of 2013 and 2014, the number of self-employed workers rose by 8 per cent, faster than any other Western European economy and outpaced by only a handful of countries in Southern and Eastern Europe. A similar picture is presented when looking at a share of overall employment, with the proportion of workers who are self-employed rising by almost a percentage point in a single year, again among the fastest in Europe.

Spencer Thompson, IPPR Senior Economic Analyst, said: “Around 2,000 people a month are moving off benefits into their own business. The government’s response to the rise in self-employment has been to praise the UK’s entrepreneurial zeal, while increasingly promoting self-employment as an option to job-seekers.

“Some have seen it as a negative development, having legitimate concerns whether a lot of the new self-employed are actually employees by another name. The Monetary Policy Committee of the Bank of England, while divided on the issue, see the rise in self-employment as a sign that the labour market may be weaker than it appears.

“The self-employed come in many shapes and sizes. Some are entrepreneurs, driven by high-growth ambitions, innovation and disruptive business models, but many are sole-traders bands simply looking to get by or small businesses happy to stay at their current level. The UK is just as much a nation of shopkeepers as a vanguard of cutting-edge capitalism.

“Many older self-employed workers are simply working longer, due to a combination of rises in the pension age and recession-induced falls in the value of wealth stored up for retirement.”